Little headway in U.S. Congress for online sales tax

WASHINGTON, July 24 (Reuters) - U.S. lawmakers debated, but found little agreement on Tuesday on a proposal to impose a national standard for letting state governments impose sales tax on online retail sales.

Legislation along these lines has languished for years in the Senate and the House of Representatives, for reasons that were clearly on display at a House committee hearing.

Some U.S. lawmakers said they were skeptical of the legislation because it would amount to a tax increase. O ther lawmakers from state and local jurisdictions backed it because it would bring their governments new revenues. Retailers, both online and otherwise, were divided.

Neither the Senate nor House bill was expected to advance before the congressional elections in November, aides said.

At present, states can only tax Internet sales made by companies with a physical presence in state borders. In practice, that means etailers such as Amazon.com Inc. collect online sales tax in some states and not in others.

In states where etailers collect no sales tax, traditional, brick-and-mortar store operators complain they suffer from a pricing disadvantage. Wal-Mart Stores Inc., Target Corp. and other "big box" retailers support the legislation.

It is also backed by Amazon, even as the company continues to negotiate separate sales tax agreements with individual states. Other etailers oppose the legislation, however.

"Amazon believes the sales tax issue needs to be resolved at the federal level and we're actively working with the states, retailers and Congress to get federal legislation passed this year," said Scott Stanzel, an Amazon spokesman, in a statement.

A House bill dubbed the "Marketplace Equity Act" would require online retailers with more than $1 million in annual sales, online or not, to collect sales taxes.

The bill would be a "state tax disaster," said Steve DelBianco, spokesman for NetChoice, which represents AOL Inc. , Yahoo! Inc., eBay Inc. and others.